PVH Corp. is beefing up down under.
The parent to Tommy Hilfiger and Calvin Klein agreed to buy full control of Gazal, its longtime licensing partner in Australia.
The deal is expected to close in the second quarter and will include the 78 percent of Gazal shares PVH doesn’t already own for 124 million Australian dollars, or about $88 million after property divestitures.
If the deal is approved, PVH will buy the its joint venture with Gazal, PVH Brands Australia, which was set up in 2014. The venture holds licenses for Calvin Klein, Tommy Hilfiger and Van Heusen as well as the Pierre Cardin, Bracks and Nancy Ganz brands in Australia, New Zealand and other parts of Oceania.
The joint venture generates revenues of about 260 million Australian dollars annually.
PVH said the deal would be material to its earnings as it will produce a non-cash gain to write-up its equity investments in Gazal and the joint venture to fair value. Excluding that gain, the deal is expected to be slightly accretive.
Under the deal, key management of Gazal and the venture are set to stay in their jobs for at least two years and use a quarter of their existing equity to take a 6 percent stake in the PVH subsidiary doing the deal.
Emanuel Chirico, PVH’s chairman and chief executive officer, said, “Gazal has enhanced the market position of our brands in Australia and New Zealand and we believe the region continues to offer significant growth over the next five years and aligns with our strategic priority to expand our direct control of businesses operated under the Calvin Klein and Tommy Hilfiger brands worldwide.”